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Rio eyes sale of Canadian diamond mine

One of the world's top diamond companies has flagged interest in buying out Rio Tinto's stake in a Canadian mine, giving Rio hope that plans to divest its diamond assets are finally gaining traction.

North American diamond group Harry Winston is Rio's joint venture partner in the Diavik mine, and flagged overnight that it was interested in lifting its 40 per cent stake to 100 per cent if a deal could be struck with Rio.

"We are aware that Rio Tinto wants to sell its 60 per cent interest in the Diavik mine where we already own the 40 per cent, that's an obvious one for us to look at as long as the price is right," said Harry Winston's chief executive Robert Gannicott.

Revelations of strong interest in Rio's Diavik stake could give the company a boost ahead of releasing its December quarter production figures at 3pm this afternoon.

Just two months ago Harry Winston paid $US500 million to BHP Billiton for its 80 per cent stake in another Canadian diamond mine known as Ekati.

The big two miners have sought to exit the diamonds sector - despite the fact diamonds are expected to be a lucrative business in the years ahead - on the grounds that it is too small a market for them to be involved in.

Harry Winston on the other hand is a diamonds specialist, and has traditionally had exposure to all stages of the diamond production chain: from mines, through to processing facilities, to the stores in which the stones are sold.

The company announced plans overnight to divest its watch and jewelry division to Swatch Ag for $US750 million, and Mr Gannicott said that revenue would create the headroom for further acquisitions.

"We will be looking for other things to do," he said.

Rio's diamond assets have been in the shop window for about 10 months now, but a sale has proved elusive.

The diamond division includes the Argyle mine in Western Australia's Kimberley region and a majority stake in a Zimbabwean mine.